South China's Guangdong Province is setting up an unemployment benefits scheme to both protect workers from sudden layoffs and help those who have lost jobs.

The system is to be in place by the end of the year.

The scheme will prohibit companies from randomly laying off workers, create an unemployment warning mechanism and make sure that jobless people can afford basic necessities and get access to re-employment programs, said Zhang Xiang, a spokesperson for the provincial labor and social security department.

"Sixteen cities have hammered out schemes following the provincial guidelines, and the (labor and social security) department is urging the remaining five cities to work out schemes by the end of this year," he said.

The goal of the new system is to keep the unemployment rate under control and nip any potential social disorder in the bud without affecting economic and social development, he said.

Zhang said enterprises must report to and get permission from the local government before laying off a certain percentage of workers. Also, enterprises will not be allowed to lay off workers if they cannot pay to compensate them.

And regional government bodies must set up contingency plans to deal with a surge in layoffs.

"How well a city handles unemployment will be taken into account in the assessment of city leaders' administrative performance," Zhang said.

One business owner said the market was the most efficient way to regulate labor.

"For now, I'm more worried about getting enough employees rather than laying them off," Pang Gujia, the owner of a toy-making company in Guangzhou, told China Daily. "You know workers are still in short supply in the Pearl River Delta."

He added that staffing decisions had to be left to the state of the market.

"If an enterprise is on the verge of bankruptcy or shutting down, it is not convenient for the government to prevent it from laying off its staff," he said.

The system is part of the province's efforts to increase job opportunities and get the unemployment rate under control. Other strategies include free training programs for the unemployed and the rural population, preferential policies like financial support and tax incentives to encourage people to start their own businesses and job-creation.

The province expects to cap the unemployment growth rate of the urban population at less than 3.8 percent per year by 2010.

And Guangdong will create at least 1 million new jobs per year in a bid to help 800,000 laid-off urbanites find new jobs and transfer 800,000 rural laborers to cities.

The province created jobs for about 2 million people last year, with the employed urban population surpassing 52,200,000, keeping the unemployment rate at about 3 percent.

(China Daily May 14, 2007)